THE MARKET SELECTS THE WRONG FIRMS IN THE LONG RUN*

We consider the effects of free entry on the market structure and social welfare of an asymmetric Cournot oligopoly. Even if we allow for the existence of different types of firms initially, only one type (in almost all cases) can survive in the long run. Free entry leads an economy to a symmetric equilibrium, in which the excess entry theorem holds. Further, we consider the socially optimal policy for this economy. In cases of either (i) a concave demand (which implies strategic substitutability) or (ii) strategic complementarity (which implies a convex demand), the type of firms that should remain in the market to achieve social optimality does not necessarily coincide with the type of firms that will survive in the long run. The market may select not only the wrong number of firms but also the wrong type of firms in the long run.     

Endogenous price leadership and technological differences

This study constructs a two-stage game of price leadership in a duopolistic market for a homogeneous product. In the first period, the two firms determine a price leader; they set a price for the product in the second period. It is demonstrated in the present study that the technologically superior firm tends to become a price leader. This result reveals that price leadership is determined by the interaction of "competitive force", which prevents the price leader from choosing too high a price (like the joint profit maximizing price or the cartel price), and "collusive force", which prevents a price from falling to a Bertrand price.     

NATURAL DISASTERS,DAMAGE TO BANKS,AND FIRM INVESTMENT

This article investigates the effect of banks’ lending capacity on firms’ investment. To identify exogenous shocks to loan supply, we utilize the natural experiment provided by Japan's Great Hanshin‐Awaji earthquake in 1995. Using a unique data set that allows us to identify firms and banks in the earthquake‐affected areas, we find that the investment ratio of firms located outside the earthquake‐affected areas but having a main bank inside the areas was significantly smaller than that of firms located outside the areas and having a main bank outside the areas. Our findings suggest that loan supply shocks affect firm investment.     

The effects of the PDCA cycle and OJT on workplace learning

In the present article, we examined the effects of the plan-do-check-act (PDCA) cycle and on-the-job-training (OJT) on workplace learning. We defined workplace learning based on the concept of an organizational learning cycle. Using survey data from a Japanese fire and marine insurance company, we found that PDCA, OJT (empowerment), and reflective communication had positive effects on workplace learning. These results suggest that quality management, empowerment and reflective practice may help to significantly improve workplace learning. We also discuss theoretical and managerial implications of this study.     

Destabilization effect of international trade in a perfect foresight dynamic general equilibrium model

In the present paper, we consider a two-country, two-good, two-factor general equilibrium model with CIES nonlinear preferences, asymmetric technologies across countries and decreasing returns to scale. It is shown that aggregate instability and endogenous fluctuations may occur due to international trade. In particular, we prove that the integration into a common market on which countries trade the produced good and the capital input may lead to period-two cycles even when the closed-economy equilibrium is saddle-point stable in both countries.     

A quantitative analysis of unemployment benefit extensions

Extensions of unemployment insurance (UI) benefits have been implemented in response to the Great Recession. This paper measures the effect of these extensions on the unemployment rate using a calibrated structural model featuring job search and consumption-saving decisions, skill depreciation, and UI eligibility. The ongoing UI benefit extensions are found to have raised the unemployment rate by 1.4 percentage points, which is about 30% of the observed increase since 2007. Moreover, the contribution of the UI benefit extensions to the elevated unemployment rate increased during 2009–2011; while the number of vacancies recovered, the successive extensions kept search intensity down.     

结构性困境中的日本经济

日本经济自2002年开始复苏,但复苏的国际环境充满不确定性,同时内部经济仍面临结构性困境。日本从20世纪80年代初起为了减少国家财政赤字而实施的新自由主义政策持续地遭遇失败,未偿公债不减反增,而政府每年的公共支出又很难降下来,加上日本向老龄化社会的快速转化使得福利政策的总体预算很难削减,以致国家财政危机不断加深。另外,劳动者工作条件和社会生活条件的恶化以及人口下降的威胁,使得新自由主义在其框架内难以解决日本面临的结构性问题,因而有必要对于马克思关于资本主义的学说进行再思考。     

Interlinkage in the endogenous real business cycles of international economies

Summary This study investigates interlinkage among the business cycles of countries from the viewpoint of endogenous real business cycles. For this purpose, we build a simple perfect foresight equilibrium model with two countries and characterize the global dynamics of a free-trade equilibrium as well as that of each country's autarky equilibrium by means of the fundamental structure of an economy.We are greatful to Murray Kemp, Mukul Majumdar, Takashi Negishi, Marcus Noland, Ian Novos, Jose Scheinkman and an anonymous referee for useful conversations and suggestions.     

A Note on Environmental Awareness and Cross-Border Pollution

Considering a Nash equilibrium in which a developed country chooses the amount of foreign aid and a developing country sets the emission tax rate and the proportion of the received aid allocated to public abatement of pollution, it is shown that an increase in the recipient countrys environmental awareness will reduce the level of cross-border pollution and benefits the donor though its foreign aid is increased.